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Comments from the EU’s Michel Barnier that a Brexit deal could be possible within eight weeks helped to spark a rally in the sterling and also supported a more positive ‘risk on’ day across the continent with most of the European bourses printing positive numbers. US markets couldn’t sustain the momentum though as underlying trade concerns and emerging markets vulnerability weighed on sentiment as we progressed through the day. The dollar dropped off again as the major currencies gained some ground back. However, given the current divergence between the majors and EM’s, traders will continue to monitor the latter closely with advances by them being limited against the greenback and many still sitting at vulnerable levels.

It was positive news for Sterling bulls with Brexit sentiment once more dominating flows in the currency, the Cable jumped 0.8% and EurGbp dropped over 60 pips on the day. We’ve seen this reaction in the currency before and optimists will be hoping that there is something concrete behind the comments, if this is the case, sterling has plenty of ground to recover and this news should keep the pound bid in the short to medium term. As usual the devil will be in the detail and analysts will be kept busy over the next couple of months if Barnier’s timeline can be met. Any disappointment from either side of the fence will of course be met by the usual sharp retracement for the pound.

It’s another relatively quiet day for economic data releases today with the Futures pricing in a mixed start to the day for Asian markets, the usual themes are set to dominate sentiment and flow with trade concerns still foremost in most investors minds. Australian traders will be looking at the Business Confidence numbers this morning with bulls once again hoping for a bit of respite for the currency which is still sitting close to recent lows. Later in the day, we have Earnings and employment data out of the UK which will bring the sterling back into focus, but these are likely to be superseded in market impact by anything further on the Brexit situation. There’s nothing of any real note out in the US session so expect the news wires and overall sentiment to remain the investor focus as we move through that time zone.

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